Air Travel Takes Off

After taking over the management of 14 airports, Fraport spends €410 million in a revamp plan to upgrade Greece’s regional airports as the tourism sector booms.

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The number of foreign visitors to Greece continues to grow.

In 2018, some 33 million international visitors journeyed to the country – three visitors for every inhabitant of Greece – drawn by its plethora of ancient sites and sunny Mediterranean beaches. Arrival figures for 2019 are even higher, showing a 4-5% increase on the previous year.

Greece’s tourism industry is booming. And that’s good for Greece and good for Fraport, the German airport operator managing the country’s 14 regional airports under a 40-year concession.

Back in 2015, Fraport bet large on Greece’s economy when few others were willing. Despite the country still being in the throes of its economic crisis, the company signed a €1.2 billion contract to operate, manage, develop, and maintain those airports as part of Greece’s privatisation programme.

Fraport clinched the deal after taking part in a tender held by Greece’s privatisation agency HRADF. It was the largest infrastructure project completed by the agency at the time.

Along with the upfront payment, the German company also agreed to an annual fixed concession fee of initially €22.9 million and a variable annual concession fee averaging 28.5% of operating profits.

Perhaps even more important for Greece’s travel sector, Fraport is investing €415 million over four years to upgrade those airports – including a major expansion in Thessaloniki, Greece’s
second-biggest city – followed by maintenance and traffic-driven capacity investments in subsequent years.

Revamping all the airports at the same time, by 2021 Fraport Greece, which is 73.4% owned by the Frankfurt-based airport operator Fraport AG and 26.6% by Copelouzos Group, will radically expand commercial space at the 14 airports while adding new services and systems aimed at increasing passenger and luggage handling capacity.

So far, upgrades on 9 of the 14 airports have been completed, namely on the island of Zakynthos, the town of Chania on Crete, the northern city of Kavala, on the Aegean islands of Samos, Mytilene, Rhodes, and Skiathos, the Ionian island of Cephalonia, and the town of Aktion in western Greece.

And late 2018, the company broke ground on a new, 34,000 m2 passenger terminal at Thessaloniki’s Makedonia airport, part of a €100 million investment programme that also includes refurbishing the existing terminal, creating new transport links to the city, and sharply increasing the number of check-in counters, baggage delivery belts, and boarding gates.

Additional upgrades include reconstruction of the runway and apron areas, and new baggage handling and control systems.

“Thessaloniki’s newly emerging airport represents much more than the €100 million construction project – out of Fraport Greece’s total €415 million infrastructure investment for all 14 regional airports,” said Fraport Greece CEO Alexander Zinell at the launch in September 2018.

“Quite simply, our goal is to completely transform Thessaloniki Airport into a modern hub for the southeastern Balkans.”

For the company, things now seem to be taking off.

Back in 2015, when Fraport signed the contract, the 14 Greek regional airports it now controls served about 23 million passengers combined, and passenger growth was rising at around 6% per year.

Since April 2017, when Fraport formally took control of those airports, passenger growth has been accelerating, rising 9.7% for the full year. In 2018, the number of passengers using Fraport’s Greek airports rose a further 8.9%, to 29.9 million travellers in total.
Passenger traffic at the 14 airports for the January-October 2019 period increased by 1% to 28.72 million, with the number of flights up by 0.9% in the same period.

Another significant benchmark for the company’s plans to establish its airports as regional players, particularly the one in Thessaloniki, is the increasing number of new routes added by airlines to and from the airports it manages. Some three dozen new routes, including roughly half-a-dozen new destinations, have been announced.

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